How to adapt to changing markets: experience and personality in a repeated investment game

Investment behavior is traditionally investigated with the assumption that risky investment is on average advantageous. However, this may not always be the case. In this paper, we experimentally studied investment choices made by students and financial professionals under favorable and unfavorable market conditions in a multi-round investment game. In particular, the probability of winning was set so that investment in one condition was advantageous, and in one condition was disadvantageous. To investigate who is more likely to adapt their investment behaviors to the changing market conditions, we also measured personality and self-efficacy. We expected that investment behavior in changing markets could be predicted by a combination of experience (students, professionals), personality (anxiety, optimism, impulsivity, and Openness to Experience), and self-efficacy (belief in one’s ability to make good decisions in an investment task). Results indicate that professionals do not significantly differ from students in their decisions. Personality and self-efficacy both predicted investment behavior. In particular, we found that optimism and anxiety were a liability in unfavorable markets, leading to unreasonable levels of risk. Impulsivity was a liability in both favorable and unfavorable markets, leading to high risk on unfavorable markets, and low risk in favorable markets. Openness to experience was an asset in unfavorable markets, leading to adjusted risk taking. Finally, self-efficacy was generally related to higher levels of risk.risk taking; field experiment; personality; unfavorable conditions; professionals

Psychological and environmental determinants of myopic loss aversion

Each economic actor is characterized by his own evaluations, traits, and strategies. Although heterogeneity of economic actors is widely acknowledged, little is known about the factors causing it. In this paper, we will examine the behavioral bias known as myopic loss aversion, and the environmental and psychological factors leading to different behavioral reactions. Myopic loss aversion has been used to suggest that fund managers should reveal information only rarely, to lead investors to choose options with (on average) higher returns. Specifically, we experimentally studied the impact of experience, individual differences, and emotions on behavioral responses to feedback frequency in an investment setting. Participants made investment decisions in one of three feedback frequency conditions: (1) they received feedback after each round and had the opportunity to make investment changes each time; (2) they received feedback after each round, but were only given the possibility to make changes every three rounds; and (3) they received aggregated feedback every three rounds, and also had the opportunity to make changes every three rounds. We collected information about personality and individual difference factors before the experiment. Finally, evaluations and emotions were measured every three rounds, immediately after feedback was given. We hypothesized that myopic loss aversion is not a general phenomenon, but that stable individual differences lead to different evaluations and emotional reactions concerning feedback. This implies that myopic loss aversion will only be present for some groups of people under certain conditions. As predicted, we found that myopic loss aversion is not generally observed; rather, we found both an experience effect and a personality effect. In particular, myopic loss aversion was particularly likely: (1) when initial investment rounds lead to negative investment experiences (i.e., losses); and (2) for investors with low self-efficacy concerning the investment situation. ‘Self efficacy’ is related to a personality profile characterized by confidence in decision-making abilities, high optimism, and low anxiety. Our results may help explain which individual and situational factors lead to myopic loss aversion, and should help researchers and practitioners provide optimal feedback to different types of investment clients.myopic loss aversion; risk taking; character traits; self efficacy; emotions; personality

A TRADING SYSTEM FOR FLEXIBLE VWAP EXECUTIONS AS A DESIGN ARTIFACT

Volume Weighted Average Price (VWAP) is widely used by institutional investors as benchmark for the execution of large equity orders. To meet the benchmark, investors have the possibility to either cross their orders in a non-intermediated electronic system or to submit a VWAP agency order to a broker. A design artifact addressing and solving the flexibility restrictions present in today’s VWAP crossing is the flexible VWAP crossing model. This work extends the model presenting the rescaling and carrying functions and demonstrating a prototype trading system utilizing the model. Pilot runs show the crossing ratio of the system using random data

An Order-Channel Management Framework for Institutional Investors

Efficient Order-Channel Management, i.e. the process of information gathering, evaluation, decision and control regarding the setup of the overall trading infrastructure and the actual order routing implementation plays a crucial role for trading success as well as the competitiveness of Institutional Investors. This article introduces a framework intended to support Institutional Investors in establishing an individual Order-Channel Management (OCM). For this overall goal, OCM is decomposed into its strategic and operational constituents and the involved key entities, parameters, processes and their interdependencies are outlined. Based on the identified properties, a framework is derived that aims at identifying a suitable mapping from order characteristics to execution venues.

Physician payment methods: a focus on quality and cost control

With rising health care costs, governments must develop innovative methods to deliver efficient and equitable health care services. With physician remuneration being the third largest health care expense, the design of remuneration methods is a priority in health care policy. Otolaryngology-Head and Neck surgeons should have an understanding of the behavioural incentives associated with different physician payment methods. This article will outline the different physician payment methods with a focus on discussing the impact on quality of care and health care costs

Psychological and environmental determinants of myopic loss aversion

Each economic actor is characterized by his own evaluations, traits, and strategies. Although heterogeneity of economic actors is widely acknowledged, little is known about the factors causing it. In this paper, we will examine the behavioral bias known as myopic loss aversion, and the environmental and psychological factors leading to different behavioral reactions. Myopic loss aversion has been used to suggest that fund managers should reveal information only rarely, to lead investors to choose options with (on average) higher returns. Specifically, we experimentally studied the impact of experience, individual differences, and emotions on behavioral responses to feedback frequency in an investment setting. Participants made investment decisions in one of three feedback frequency conditions: (1) they received feedback after each round and had the opportunity to make investment changes each time; (2) they received feedback after each round, but were only given the possibility to make changes every three rounds; and (3) they received aggregated feedback every three rounds, and also had the opportunity to make changes every three rounds. We collected information about personality and individual difference factors before the experiment. Finally, evaluations and emotions were measured every three rounds, immediately after feedback was given. We hypothesized that myopic loss aversion is not a general phenomenon, but that stable individual differences lead to different evaluations and emotional reactions concerning feedback. This implies that myopic loss aversion will only be present for some groups of people under certain conditions. As predicted, we found that myopic loss aversion is not generally observed; rather, we found both an experience effect and a personality effect. In particular, myopic loss aversion was particularly likely: (1) when initial investment rounds lead to negative investment experiences (i.e., losses); and (2) for investors with low self-efficacy concerning the investment situation. ‘Self efficacy’ is related to a personality profile characterized by confidence in decision-making abilities, high optimism, and low anxiety. Our results may help explain which individual and situational factors lead to myopic loss aversion, and should help researchers and practitioners provide optimal feedback to different types of investment clients

Die Charakterisierung phototropher Schwefelbakteriengemeinschaften in drei dimiktischen Seen Norddeutschlands

Erstmalig erfolgte ein Vergleich rezenter anaerober phototropher Schwefelbakteriengemeinschaften an drei dimiktischen Seen Norddeutschlands. Dabei konnte eine starke Abhängigkeit der Variabilität der Bakteriengemeinschaft von der saisonalen Temperaturentwicklung sowie der Licht- und Sulfidverfügbarkeit im See nachgewiesen werden. Das Auftreten dieser Bakteriengemeinschaften beeinflusst die Stoffkreisläufe und die Nährstoffretention (Phosphatbarriere) innerhalb der untersuchten Seen. Sediment- und molekularbiologische Analysen belegen das Auftreten anaerober phototropher Schwefelbakterien

Dual threshold optimization and network inference reveal convergent evidence from TF binding locations and TF perturbation responses

A high-confidence map of the direct, functional targets of each transcription factor (TF) requires convergent evidence from independent sources. Two significant sources of evidence are TF binding locations and the transcriptional responses to direct TF perturbations. Systematic data sets of both types exist for yeast and human, but they rarely converge on a common set of direct, functional targets for a TF. Even the few genes that are both bound and responsive may not be direct functional targets. Our analysis shows that when there are many nonfunctional binding sites and many indirect targets, nonfunctional sites are expected to occur in th